Drop in GST Collection: Government to Track Down Defaulters

Shubham Chauhan

16 Mar, 2023

A Committee has been set-up to discuss different ways of tracking down GST defaulters to boost GST collection. In September there has been a decline of 2.67% in GST collection as compared to last year’s collection during the month of September.

In September, GST collection dropped down below Rs 1 lakh crore mark to Rs 91,916 crore. September collection is believed to be the lowest in the last 19 months. The Union Government has been making continuous efforts to curb tax evasions to increase revenue collections.

A committee has been set-up to suggest measures for growing revenue collections and submit the report to the GST Council Secretariat within 15 days. The committee will also use fraud detection software to identify the defaulters.

Mr, Ajay Bhushan Pandey, Revenue Secretary will also be the part of the committee comprising of 12 members from both centre and state governments. The committee will check into the government’s lenient approach during the implementation of GST. The Government needs over Rs 1 lakh crore to meet its fiscal target and also to not compensate states for losses.

Use of Fraud Detection Software to Increase GST Collection

The Committee will have access to a large amount of data from the last two years on taxpayers compliance and revenues. To mark out defaulters, the committee will use the data analytics and hence actions will be taken against the defaulters pointed out by the software. Furthermore, the committee will explore new ways to increase tax collections and widen the tax base without increasing tax.

Reasons Behind Drop in GST Collection

The two main reasons responsible for lesser GST collections are the fake claims of ITC (Input Tax Credit) and tax evasion. CBIC (Central Board of Indirect Taxes and Customs)^[1] recently issued a notification regarding restriction on claiming provisional ITC, where a taxpayer cannot avail more than 20% of tax credit available in GSTR-2A on a provisional basis. The government took this step to curb the ITC fraud that takes place under the name of genuine ITC.

Conclusion

Indirect Tax Authorities have started comparing the sales reported by businesses under GST with what they have reported to the income tax authorities to track down the mismatches. The Implementation of the new GST system from April 2020 and the e-invoice system from January 2020 will boost the GST collection by keeping a check on tax evasion. The Union Government has been making continuous efforts to curb tax evasions and make GST more revenue efficient.

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